Airport Concessions Lima / Peruan Example for Brazil?
PPP Americas, 12 May 2010Felix von Berg, Fraport AG
Content
Page 2
Lima airport concession and the Peruvian
model for airport concessions
Implications for Brazil
PPP Americas 11-13 May 2010, Fraport Presentation
Content
Page 3
Lima airport concession and the Peru-
vian model for airport concessions
Implications for Brazil
PPP Americas 11-13 May 2010, Fraport Presentation
Fraport – managing 13 Airports worldwide under various legal forms
Lima
FRANKFURT
Hong Kong
Shanghai
Amsterdam
Antalya
Hahn
DelhiOrlando
Senegal*
Xi‘an
Kairo*
Athen
Wien
Hannover
Varna Burgas
Lima
FRANKFURT
Antalya
Delhi
Dakar
Xi‘an
Hanover
Varna & Burgas
CairoRiyadhJeddah
Ownership of airportConcessionsManagement Contract
Fraport
St Peters-burg
Majority MinorityFraport
PAX 2009 (m)
Frankfurt 50.9
Delhi 25.3
Antalya 18.7
Jeddah 15.3
Cairo 14.4
Riyadh 10.8
Xi‘an 15.3
Lima 8.8
St. Petersburg 6.8
Hannover 5.0
Burgas 1.7
Dakar 1.8
Varna 1.2
Total 176.0
Lima
PPP Americas 11-13 May 2010, Fraport Presentation
PPP Americas 11-13 May 2010, Fraport Presentation
page 5
Jorge Chavez International Airport (JCIA) Key Facts
Jorge Chavez Int, Airport
• Runway: 3,507,5 m• 84,570 m² passenger
terminals• 304,881 m² of apron • 63 commercial shops run by
34 different companies• 19 passenger loading bridges
Traffic 2009
• 8,786m passengers• 232,374 tons of cargo• 104,965 air traffic
movements• Non-stop destinations
• National: 16• International: 29
page 6
• Typlical “build, operate and transfer”
concession with full air & landside opera-tion of airport (w/o air traffic control) by concessionaire (Lima Airport Partners)
• Concession start 2001, duration 30 years + 10 year extention option
• Take-over of existing staff, but not of bureaucratic structures – quasi start-up
• Investments• during concession > US$ 1bn• Up-to-date > US$ 266m
• Mainly rigid requirements for expansion - not demand based investment criteria
• Service Level IATA B as main quality parameter
Concession outline
PPP Americas 11-13 May 2010, Fraport Presentation
page 7
• Concession fee: %-age of revenues
• CPI – X tariff regulation
• Tax stability agreement for investors
• Solid bankability with usual assignments possible, step-in rights for banks and certain guarantees for debt providers by Peruvian state- Initial financing by OPIC and German
KfW- 2007: Refinancing of LAP with bond
issue• achieved IG-rating before Peru did• Won Euromoney’s and
International Financial Law Review’s “Deal of the year“ Latin America / Americas
Risk Mitigation / Sharing
PPP Americas 11-13 May 2010, Fraport Presentation
page 8
Successful concession (I/III)
1994 1995 1996 1997 1998 1999***2000*** 2001 2002 2003 2004 2005 2006 2007 2008
25 m
50 m
75 mCAPEX (US$)Investments• Before concession
minimal investments • After concession
focussed investments toincrease capacity, qualityand retail revenues average yearly invest: ~ US$ 6 Mio
average yearly invest: ~ US$ 30m
2009
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
PAX
CAGR: 3%CAGR: 10%
5 m
10 mPAX development• Before concession
PAX CAGR (3%) = Ø-GDP growth (2,5%)
• After concession: PAXCAGR 10% versus 5% Ø-GDP growth
Concession
2009 tariffs* in real terms below 2001
2009
1994** 1995 1996 1997 1998 1999*** 2000***2001 2002 2003 2004 2005 2006 2007 2008
Contribution to the public sector**(US$)
* Weighted average ** Calculated before privatization as pro forma EBITDA ,/, Capex, after privatization as total concession fees to public sector + taxes, ***No pro forma data availabe,
25 m
50 m
75 m
100 mNet effect for publicsector• contribution in year 1
already ~ 1,5 x EBITDA and ~ 2 x EBITDA ,/, Capexof best year prior to privatization
average contribution p,a,: ~ US$ 11 Mio
average contribution p,a,: ~ US$ 65 Mio
2009
PPP Americas 11-13 May 2010, Fraport Presentation
LAP concession May 2009
From taking over the airport in 2001.........Successful concession (II/III)
page 9
substation
substation
retail area
apron
page 10
....to one of the best airports in the regionSuccessful concession (III/III)
Skytrax World Airport AwardsTM
1. Place – „Airport of the year“ South America
2. Place – „Airport of the year“ South America
2. Place – „Airport of the year“ South America
1. Place – „Airport of the year“ South America
1. Place – „Airport of the year“ South America
World Travel Awards
Winner Leading Airport South America 2009
2005
2006
2008
2009
2010
2009
PPP Americas 11-13 May 2010, Fraport Presentation
page 11
Funding of Peruvian Airport Sector
Lima airport concession fee
paymentsDedicated Fund
Nothern PeruRegionals
Southern Peru Regionals
(tender ongoing)
• Not profitable airports• Awarded on basis of
least subsidy for operations
• Capex funded by state
PPP Americas 11-13 May 2010, Fraport Presentation
$
$
$
Content
Page 12
Lima airport concession and the Peruvian
model for airport concessions
Implications for Brazil
PPP Americas 11-13 May 2010, Fraport Presentation
page 13
Draft Concession Program for Brazilian Airport Sector
self-sustaining airports (17)*
Remaining 50 airports
Concession program with [25] years terms, tendered individually or in groups. Concessionaire’s responsibilities• Operation and maintenance with international
efficiency and quality standards • Investment obligation to meet growing demand• Concession fee to be paid to the government
Stay with the Infraero / public administration. Funding from• Own operating cash-flow• Concession fee payments from 17 airports
Infraero operating 67 airports with 97% Brazilian commercial traffic
* Of the 67 Infraero airport all 18 with PAX > 1m (exlcuding Natal airport) were studied. All but Cuibá airport were identified as economically viable under above mentioned concession regime
PPP Americas 11-13 May 2010, Fraport Presentation
Ball-park calculation for 17 airports under concession regime (conservative case, in real terns)
page 14
Revenue
R$ mill. R$ mill.
growth 1st phase 2nd phase 3rd phase 4th phase totalannual
averageannual
average
base 1 15 25 25 2009 2013 2021 2029 2009 25 25
2008 2009 2023 2033 years 2012 2020 2028 2032 2032 years years
1 GRU Guarulhos 20,4 21,6 37,2 40,0 3% 1.217 1.021 776 385 3.400 1.134 454 40% 52,5%
2 CGH Congonhas 13,7 14,5 19,7 19,7 1% 250 145 78 78 551 296 130 44% 15,0%
3 GIG Galeão 10,8 11,5 29,2 43,6 6% 692 783 1.585 994 4.054 778 117 15% 13,5%
4 BSB Brasília 10,4 11,2 27,7 36,6 5% 305 633 907 385 2.231 261 3 1% 0,3%
5 SSA Salvador 6,0 6,5 15,3 18,9 5% 168 597 423 198 1.385 192 6 3% 0,7%
6 CNF Confins 5,2 5,5 11,4 15,3 4% 152 264 302 185 903 170 36 21% 4,1%
7 POA Porto Alegre 4,9 5,3 12,5 17,7 5% 267 271 332 199 1.068 196 6 3% 0,7%
8 REC Recife 4,7 5,0 10,4 14,0 4% 70 313 271 168 821 145 10 7% 1,2%
9 CWB Curitiba 4,3 4,6 10,9 15,5 5% 144 486 329 206 1.165 161 21 13% 2,4%
10 SDU Santos-Dumont 3,6 3,8 7,7 7,7 3% 71 92 62 51 277 99 6 6% 0,7%
11 FOR Fortaleza 3,5 3,7 7,7 10,3 4% 113 232 233 139 717 99 2 2% 0,2%
12 BEL Belém 2,2 2,3 4,1 5,2 4% 42 46 89 68 245 56 1 1% 0,1%
13 FLN Florianópolis 2,1 2,2 5,0 7,1 5% 123 106 131 84 444 67 1 1% 0,1%
14 MAO Manaus 2,0 2,1 4,5 6,0 4% 103 299 254 165 822 150 14 9% 1,6%
15 VIX Vitória 2,0 2,1 5,1 7,2 5% 211 106 128 83 528 83 1 1% 0,1%
16 GYN Goiânia 1,6 1,6 3,7 5,3 5% 110 90 112 70 382 62 1 2% 0,1%
18 VCP Campinas 1,1 1,2 2,8 3,9 5% 769 317 410 256 1.752 344 59 17% 6,8%
98 105 215 274 4,2% 4.807 5.801 6.421 3.714 20.744 4.293 865 20,1% 100%
of revenue
Traff ic17 Airports
R$ MM - cte - base dez 2008
25 year term - 2009 - 2033
P ax total in million
ano
TOTAL
Concession Fee
of program
%R$ million
Investments
PPP Americas 11-13 May 2010, Fraport Presentation
Year
total average total average
Concession fee (minimum) 572 607 644 684 2.508 627 21.615 865
Investments 972 1.410 1.425 999 4.807 1.202 20.744 830
Taxes and Contributions 164 198 212 230 805 201 4.470 179
17 Airports 1.708 2.216 2.282 1.914 8.119 2.030 46.829 1.873
total average total average
Revenue 50+Ataero 50+headquarters 438 457 477 498 1.871 468 17.709 708
Cost 50+headquarters+payroll w/o 17 -748 -810 -852 -886 -3.296 -824 -28.827 -1.153
Investment estimate 50 -156 -180 -211 -235 -782 -195 -4.773 -191
A) 50 remaining airports -466 -532 -586 -622 -2.207 -552 -15.891 -636
B) Concession Fee 17 Airports 572 607 644 684 2.508 627 21.615 865
Excess Cash-flow (A + B) 106 75 58 62 301 75 5.724 229
total average
INFRAERO ressources 253 271 301 133 958 240
Ataero portion of INFRAERO 198 225 127 98 648 162
INFRAERO 67 Aeroportos 451 496 429 231 1.607 402 Direct transfers from the Union 254 96 96 145 591 148
Other transfers (via agreements) 40 297 49 23 409 102
Transfers 294 394 145 168 1.000 250
TOTAL 745 890 573 399 2.607 652
total average
Concession (17 airports) 972 1.410 1.425 999 4.807 1.202
INFRAERO (50 airports) 156 180 211 235 782 195
TOTAL 67 Airports 1.129 1.590 1.636 1.234 5.589 1.397
Concessions 17 Airport 2009 2010 2011
2009 2010
2009 2010
2011
2005Investments (actual) 2008
4 years 25 years
4 years 25 years2012
2012
2007
2011
Proposed Investments
INFRAERO 50 remaining airports
20124 years
20064 years
page 15 Funding of 67 airports: ball-park comparison - public sector view (conservative case, in real terns)
Infr
aero
/ p
ublic
sec
tor
fund
ing
with
con
cess
ion
sF
undi
ng o
f in
vest
men
ts20
05-
2008
(ac
tual
)
Year one total concession
fees > Infraero2008 operating
cash-flowwithout investments
2004-2008Infraero able togenerate Ø cash-flow for invest-ments~ R$ 0,4bn
2009-2012Estimated requir.Ø investment~ 1,4bn
Concessionprogram can coverthe gap
Note: 1) ATC and treasury will remain with existing shares of tariffs (67 airports)PPP Americas 11-13 May 2010, Fraport Presentation
Thank you for your attention!
page 16
Fraport, The Airport Manager
Frankfurt Airport Burgas Airport Varna Airport
Cairo International Airport
Aéroport International Blaise Diagne, Dakar
Xi´an Xianyang International AirportKing Abdulaziz Internation Airport, Jiddah
Flughafen Hannover-Langenhagen
Antalya AirportIndira Gandhi International Airport, Delhi
Jorge Chávez International Airport, Lima
King Khalid International Airport, Riyadh
Pulkovo International Airport, St, Peterburg
176 Million Passengers, 13 Airports, 1 Airport Manager
PPP Americas 11-13 May 2010, Fraport Presentation
Page 17
Annex
PPP Americas 11-13 May 2010, Fraport Presentation
page 18
Main assumptions and model considerations of outlined concession model
description
Award criteria• Award on basis of highest proposed concession fee payment
(percentage)• [Consideration of technical proposal &quality of business plan (pass/fail
criterion or as additional award criterion) suggested]
Demand• Based on 2004-2008 traffic growth and IAC data as well as AGC
(/Fraport) analysis based on current air traffic distribution, trends and capacity constraints
Tariffs • Current tariff-regime kept in concession model. Concessionaire get’s
current Infraero tariff share (“Parcela Infraero” and “Ataero Infraero”). ATC (“Ataero Aeronáutica”) and treasury (“Parcela Tesouro”) retain their share
Opex • Infraero’s productivity and efficiency parameters were analyzed and
adjusted in accordance with international benchmarks [not very aggressively]
Investments • Based on current capacity and demand forecast, investments were
modeled to meet IATA service level C [much higher quality standard than currently in place]
Concession term
• 25 years• [could be adjusted on a case-by-case basis in order to make some
concessions more attractive and stimulate stronger tender competition ]
PPP Americas 11-13 May 2010, Fraport Presentation